Technology has made amazing leaps and bounds over the past decade. Among recent innovations like autonomous vehicles, machine learning, and Bitcoin, artificial intelligence (AI) is a major force that’s changing the way the world works.
Today, some of the world’s largest companies are using chatbots to provide faster, more accurate customer service, detailed algorithms and deep learning capabilities are leading to better outcomes in health care, and cloud computing has changed the way data is stored, served, and used.
These innovations have made the world a different place, and have made many investors filthy rich in the process.
Wise investments in tech companies like Amazon.com, Google (now Alphabet), and Microsoft in the early 2000s would have yielded returns of hundreds or even thousands of percentage points. These are among the major players in AI, making them some of the strongest stocks on the market today.
But in a market that’s becoming saturated with many artificial intelligence stocks, choosing the best investment opportunities in the space may be a daunting task. So where do you start?
Pro tip: David and Tom Gardener are two of the best stock pickers. Their Motley Fool Stock Advisor recommendations have increased 563% compared to just 131.1% for the S&P 500. If you would have invested in Netflix when they first recommended the company, your investment would be up more than 21,000%. Learn more about Motley Fool Stock Advisor.
Best AI Stocks to Buy for 2021
When looking for strong opportunities in the artificial intelligence industry, it’s important to look for companies on the leading edge of innovation. As we saw with the once-king of the smartphone, BlackBerry, and the once-king of social media, MySpace, when companies in tech fail to innovate, they get bulldozed by the competition.
It’s also important to look into how these companies are actually implementing their AI technology and the market potential that comes along with their applications.
As is the case in any industry, each company has its own history, risks, and potential future. It’s important to do your research and make wise decisions when investing in the industry.
Some of the best artificial intelligence stocks on the market today include:
1. Amazon.com (NASDAQ: AMZN)
The brainchild of Jeff Bezos, Amazon.com is one of the biggest success stories that has ever taken place in the stock market. The stock traded at just $1.73 per share 23 years ago, and few had faith that it would ever become anything worthwhile.
By early 2015, the stock was trading at around $300 per share, and there were still plenty of naysayers. Bezos seemed to be on a spending spree as he piled on debt to build out a world-leading infrastructure.
Then something amazing happened. That expensive infrastructure gave Bezos the edge that led his brainchild to become the biggest e-commerce company in the world. The company was already the go-to online shopping experience before the COVID-19 pandemic, got a major boost as coronavirus kept people indoors, and continues to see rapid growth in revenue and earnings, as well as interest from investors.
So, what does a massive e-commerce company have to do with artificial intelligence? Everything!
As a major player in tech, the company realized early on that AI would be the way of the future, and it became one of the first online stores to incorporate the technology into the shopping experience. It’s the technology that leads to suggestions as you shop, makes it possible to predict what you’re looking for as you type into the search bar, and connects related products often purchased together to build an unmatched shopping experience for consumers.
But this tech conglomerate is far more than just an e-commerce play. The company is incorporating artificial intelligence into products for various industries.
Aside from running major features of the company’s e-commerce shopping experience, Amazon uses AI in several other applications; primarily:
- AWS. Amazon Web Services (AWS) is the company’s cloud computing service, the type of service that hosts artificial intelligence programs. AWS is a cloud computing powerhouse, dominating the industry with control of about 32% of the global market, according to CHANNELe2e.
- Alexa. Alexa is the company’s well-known artificial intelligence assistant. The voice behind the Echo family of products, when paired with compatible devices, Alexa can turn lights on and off, close and open smart blinds, make phone calls, and perform a vast array of other tasks, bringing AI and automation home, quite literally.
- Autonomous Driving. Through its AWS product, the company offers a full suite of computing services specifically designed to address the challenges of making advanced driver assistance systems and autonomous driving possible.
Considering the company’s dramatic growth since inception, its proven ability to stay ahead of the curve in innovation, its impressive use of artificial intelligence, and the dominance of its core e-commerce business, AMZN stock is one for the watchlist.
2. Alphabet (NASDAQ: GOOG | GOOGL)
Alphabet originally started as Google, a company so important in American and global culture that it became both a noun and a verb — to Google something is synonymous with searching for it online. Very few companies have ever achieved this kind of brand awareness.
Google has long been a player in the artificial intelligence space. One could argue the company laid the groundwork for modern AI with the algorithms it has been creating for its search engine since its inception.
As you might imagine, AI is part of just about everything the company does today. It’s the reason you receive relevant ads when you use Google Search, how the search bar knows what you’re typing after you’ve entered just a handful of letters, and how you receive relevant localized results for businesses near you.
But, like many others on this list, the company is far from a one-trick pony.
Alphabet changed its name from Google as it entered into several industries, where it incorporates the power of artificial intelligence. Some of the most impressive include:
- Autonomous Vehicles. The company was one of the first to explore the possibilities of autonomous driving. The company plans to use this technology to gather data for Google Maps and Google Earth with driverless cars and provide disabled consumers a safe way to travel. For example, the company’s autonomous driving capabilities appeared in a video in 2016 in which a blind man used a Google vehicle to get around.
- Health Care. Alphabet is also using its AI capabilities as a means to better outcomes in the health care space. The company has already demonstrated its AI detects breast cancer more accurately than standard testing procedures, has received FDA clearance for a smartwatch for arrhythmia monitoring, and used its AI to provide communal data during the COVID-19 pandemic.
- Advertising. You can’t mention Google without mentioning advertising. It’s the leading player in the space and advertising revenue represents the lion’s share of the company’s top line, generating nearly $183 billion in 2020 from this segment alone according to CNBC. Through its artificial intelligence technology, the company is able to show more relevant ads, resulting in higher click-throughs and sales for advertisers and a better experience for the end user.
Over the past couple of decades, the company has proven an ability to dominate any space it touches. With a history of consistent growth and an ability to stay ahead of the competition in terms of innovation, GOOG stock is one to pay close attention to.
3. Apple (NASDAQ: AAPL)
Apple is another household name. The company is the maker of smash-hit technology products like the iPhone and iPad. Its innovation and continued dominance in the mobile devices space is what makes the company the massive success it is today.
The smartphone pioneer was one of the first companies to put artificial intelligence into the hands of everyday people with Siri, an AI assistant that comes installed on every iPhone and iPad. Consumers can ask Siri questions, have the AI solve riddles, and even have Siri write out texts and make phone calls.
Just about anything that can be done on the iPhone can be done through Siri. However, Siri isn’t the company’s only application of artificial intelligence.
As with many others on this list, the company uses AI in various applications, including:
- Autonomous Vehicles. Apple is yet another massive tech company that’s working on the future of transportation: self-driving cars. The company is actively working to develop the Apple car. When it hits the market, the car is expected to be a fully electric vehicle capable of driving itself and providing quality entertainment during your ride.
- Facial Recognition. The company was also one of the first to incorporate artificial intelligence technology into the way you unlock your phone, with the iPhone being one of the first smartphones to provide facial recognition features.
- Sleep and Fitness Tracking. The tech giant also uses its AI technology in the health care space, with sleep and fitness tracking built into the company’s smart watch.
Apple has proven its dominance through the years and continues to do so. It only makes sense that the company is staying on top of innovation as artificial intelligence leads to yet another pivotal shift in the way people do just about everything. Moreover, this leadership and innovation makes the company a great pick for the tech stock investor.
4. Microsoft (NASDAQ: MSFT)
If you haven’t heard of Microsoft, chances are you live under a rock. The company is a leading player in software and dominates the computer operating system space. According to Statista, the company controls more than 77% of the global operating system market.
We’re talking about the company behind Windows and the Office suite of products, including Word, Excel, PowerPoint, and Outlook.
As a leading player in the technology industry, Microsoft is also leading the way in artificial intelligence innovation. AI is used in just about every piece of software developed by the company, driving better user experiences than its competitors and keeping the company in the leading position.
The tech pioneer isn’t just using AI in its software offerings; the company’s activity in artificial intelligence spreads into multiple areas of tech.
While the company’s use of artificial intelligence in its own software keeps it in the leadership position, the company is incorporating its AI in various applications, including:
- Cloud Computing. Microsoft is a big player in the cloud computing space. Its cloud computing platform Azure is second only to AWS in terms of market share.
- AI Classes. Knowing that building a community solidifies its leadership in the AI space, the company hosts an AI school, bringing new talent into the community every day.
- AI for Good. The company is also the pioneer of the AI for Good movement, which is designed to use AI as a tool to overcome humanitarian, environmental, accessibility, cultural heritage, and health challenges.
Microsoft has a strong history as a solid performer in the stock market. This history and likely future gains are the result of the company’s ability to consistently innovate, bringing cutting edge solutions to consumers and businesses. This trend is likely to continue along with the AI revolution, making MSFT stock an investment worth consideration.
Pro tip: Before you add any stocks to your portfolio, make sure you’re choosing the best possible companies. Stock screeners like Trade Ideas can help you narrow down the choices to companies that meet your individual requirements. Learn more about our favorite stock screeners.
5. NVIDIA (NASDAQ: NVDA)
Artificial intelligence wouldn’t be possible without advancements in microchips, graphics processing units (GPUs), and semiconductor technology. These top-of-the-line technologies are used in the data centers that house the cloud and keep artificial intelligence alive. In essence, they can be thought of as vital organs for artificial intelligences.
This is where NVIDIA thrives.
The chip maker is a dominant player in the GPU space. According to WCCF Tech, the company controls 82% of the discrete GPU market as of the fourth quarter of 2020. That’s a massive statement, showing that the company has created a balance between cost and effectiveness, providing top-notch GPUs at reasonable pricing and attracting the vast majority of its target market.
NVIDIA’s most prominent application of AI technology is the use of its GPUs in the data centers that make up the heartbeat of today’s AI. The company also is involved in AI in other areas, including:
- Intelligent Machines. The company’s GPUs and other technologies provide the framework needed for intelligent machines like autonomous vehicles and robotic surgery technology.
- Improved Communication. NVIDIA researchers have found a way to use artificial intelligence to greatly reduce the bandwidth needed to make video calls while simultaneously improving quality and reducing latency.
- Breakthroughs. According to Forbes, NVIDIA chips have been used in nearly every major artificial intelligence breakthrough, from detailed graphics in video games to self-driving cars.
Artificial intelligence wouldn’t exist without graphics processing units, and without NVIDIA, they may have never been invented. Since the introduction of the technology, NVIDIA has continued to innovate, maintaining a growing and controlling share of its market. As the AI industry grows, it only makes sense that the company will continue to grow, making it a strong investing opportunity.
6. IBM (NYSE: IBM)
Just about everyone has heard of International Business Machines by its acronym, IBM. Throughout its history, the company has centered itself around providing top-of-the-line technology to businesses to improve productivity while reducing costs.
It’s done a great job of doing so too, and in the process the company has grown to a market cap of more than $130 billion.
As the business environment changes and new tools become available, the tech giant has worked to stay ahead of the curve. As the AI industry started to bring new, more effective solutions to businesses, IBM jumped all over the opportunity.
Like just about every other company on this list, IBM uses artificial intelligence technology in a wide array of applications, including:
- Watson. Named after IBM founder Thomas J. Watson, Watson is an artificial intelligence designed to answer questions. The AI is capable of answering questions posed in natural human language, one of the first AIs with this capability.
- Watson for Business. Once Watson became capable of answering questions, the company continued to work on the AI to make it a perfect tool for business owners. Today, Watson for Business can be used to discover and solve inefficiencies in just about any process.
- Watson Health. Finally, Watson Health is quickly becoming an important aspect of clinical trials during the development of new therapies that address some of the world’s most challenging medical conditions, including various forms of cancer, heart disease, and even COVID-19.
Throughout IBM’s history, the company has been a leader in technology, specifically aimed at providing efficiencies in the business process. With such a strong history, it’s hard to imagine the future would be any less fruitful as the company continues to grab the AI bull by the horns and bring solutions to some of the most challenging problems in business today. All told, IBM is a stock that’s well worth your attention.
7. Baidu (NASDAQ: BIDU)
A leading technology company in China, Baidu is making a splash among American and other investors around the globe, and for good reason. The company is essentially China’s version of Google, which poses an incredible opportunity.
China is an emerging market that’s evolving quickly. As a result, investments in thoughtfully chosen Chinese stocks are proving to be fruitful. With Baidu leading the way in Chinese innovation in Internet services such as search and advertising, as well as artificial intelligence, it is a clear leader within this emerging economy.
As with Google, the Chinese online search leader uses artificial intelligence to provide quality search results as well as advanced advertising capabilities. Moreover, the company also uses artificial intelligence in several other applications.
While Baidu uses artificial intelligence in online search and advertising, it’s not a one-trick pony. Some other ways the company applies AI technology include:
- Brain. Brain is the leading AI open platform in China. The platform has more than 220 capabilities and is used by more than 1.5 million AI developers.
- Little Fish. Little Fish is Baidu’s artificial intelligence for consumers, and like Amazon’s Alexa, consumers can purchase Little Fish units to bring artificial intelligence into their homes.
- Home Assistance Robots. Finally, Baidu is actively working to develop home assistance robots that will help with menial tasks around the house.
Baidu is a massive company and a clear leader in the Chinese AI and online services markets. Considering how quickly the Chinese economy is emerging, and the fact that there’s still a vast audience for the company to tap into as the economy grows, BIDU is a clear choice for any tech and AI investor’s portfolio.
8. Netflix (NASDAQ: NFLX)
When you think of Netflix, AI may not come immediately to mind. After all, the company is a video streaming service — albeit a leading streaming video service, but a streaming video service nonetheless.
So, what is Netflix doing that makes it worthy of inclusion in a top artificial intelligence stocks list?
Netflix isn’t working to solve some of the world’s most pressing health or social challenges. It’s not a company that is using AI in various applications and industries. The company’s aim is simply to provide the best home entertainment experience possible. However, it’s doing a great job of using artificial intelligence technology to do just that.
Netflix uses machine learning technology to create custom lists of video content that you might enjoy based on what you’ve watched in the past. The company also uses artificial intelligence to choose the thumbnails that are most likely to lead to clicks when displayed in browsing screens.
All told, the company’s use of artificial intelligence is a major reason for its leadership in the highly-competitive streaming video industry. According to the Motley Fool, Netflix controlled about 36.2% of the streaming video market share in 2020.
With a leading position in a highly competitive industry, Netflix is obviously doing something right. As it continues to use AI to create a more compelling user experience, growth is likely to continue, making Netflix a strong stock to consider for your portfolio.
9. Salesforce.com (NYSE: CRM)
Salesforce.com isn’t exactly a household name. But if you’re a business owner, chances are you’ve heard the name. The company’s claim to fame is its customer relationship management (CRM) software.
Through the use of the company’s software, companies are able to streamline the workflow, ensuring customer satisfaction while taking advantage of every reasonable opportunity to upsell.
As artificial intelligence became available, the company jumped on the opportunity to incorporate it within its services. As a result, the company’s customer relations management software has stayed ahead of the curve, dominating with over 19% of the market share according to Forbes.
Salesforce.com developed an artificial intelligence known as Einstein. Einstein provides intelligent case classification, making it possible to get more done in a shorter amount of time. It also assists in the provision of more personalized customer service and streamlines sales through deep learning capabilities.
As Salesforce.com continues to use artificial intelligence to streamline sales, customer support, and lead generation, it will continue to be an integral tool for businesses of all sizes moving forward, allowing it to capture more and more market share and making it an investment that’s hard to ignore.
10. Tesla (NASDAQ: TSLA)
Tesla is a household name in transportation. The company is known for its electric vehicles and its eclectic founder and CEO, Elon Musk.
So, what is an electric car manufacturer doing on the list of the top AI stocks?
Like Salesforce.com and Netflix, Tesla isn’t in a rush to use artificial intelligence to solve a wide array of problems. Instead, it’s focus is more singular: to provide a safe, reliable, clean, and enjoyable driving experience.
To do so, the company has incorporated artificial intelligence into its vehicles through the use of its Autopilot AI. All the company’s new vehicles come with driver assistance capabilities.
Interestingly, using AI, Tesla has created a network through its vehicles, collecting data from each and mapping that data to create an improved driving experience for all. Moreover, this data collection will make the company’s vehicles safer and more efficient when the company begins mass producing fully autonomous versions of its cars and trucks.
Tesla is by far the leader in high-tech vehicles, and there’s no sign of that changing any time soon. As the company continues to use AI to provide a safer and more enjoyable traveling experience, its vehicles will continue to be met with high levels of demand, making it a stock that should be paid attention to.
Artificial intelligence can be seen all around you. Chances are you have it in your home either through smart-home technology, smart-television technology, or simply on your cellphone. This technology is changing the way people treat illnesses, work out, connect with others, and run businesses, and it’s generating massive profits for the companies on the leading edge of innovation in the industry.
The stocks listed above are some of the strongest players in the AI industry as it stands today, and they provide compelling opportunities for significant growth ahead.
As is always the case, before making any investment decisions, it’s important to do your research. Investing without research is akin to gambling and will likely result in significant losses. Nonetheless, if you take the time to research opportunities in AI and make well-thought-out investment decisions, the potential returns can be mind boggling.
Disclaimer: The author currently has no positions in any stock mentioned herein nor any intention to hold any positions within the next 72 hours. The views expressed are those of the author of the article and not necessarily those of other members of the Money Crashers team or Money Crashers as a whole. This article was written by Joshua Rodriguez, who shared his honest opinion of the companies mentioned. However, this article should not be viewed as a solicitation to purchase shares in any security and should only be used for entertainment and informational purposes. Investors should consult a financial advisor or do their own due diligence before making any investment decision.